implementation bpsm

7/30/2019 Implementation Bpsm

1/60

Strategy Implementation


2/60

Formulation of a strategy is not the end ofstrategic management. In fact, it is thebeginning of a whole new episode of success orfailure of an organization.

Implementing a strategy requires a very highlevel of commitment from the top management,employees, organization culture, structure,leadership, departments etc.

Strategy formulation and implementation areinterrelated.


3/60

Forward linkage : Deals with preparing theorganizational activities including the org.

structure, leadership, culture etc required forimplementation.

Backward linkage : Deals with the influence ofimplementation on the strategy formulation. (To

avoid any deviations in the ground reality )

Different strategies require different changes inthe business processes.


4/60

Stability strategy requires least change.

A strategy of changing price requires

minor changes in the marketing dept. anda few changes in the day to day businessactivities.

Joint Ventures require radical change likereplacing org. structure, technology, newmarkets, new practices etc.


5/60

Project implementation

Strategies give rise to plans, programmes,projects, budgets, policies, procedures,

rules and regulations. Project : A project can be defined as aOne shot, time limited, goal oriented,

major undertaking requiring thecommitment of varied skills andresources


6/60

A project passes through the followingphases :

Conception : Of a number of strategicalternatives that generate at the time ofstrategy formulation, some ideas form theplatform for the beginning of projects.

These ideas are developed further andranked on priority.


7/60

Definition phase :Of all the project ideasselected and ranked, a preliminary analysis isdone from the point of view of marketing,technical, financial, ecological feasibility.

After studying the viable projects, a detailedproject report is prepared for submitting to thefinancial institutions.

This report contains all details about the projectsuch as the promoters, nature, capacity,location, size, cost, assets, selling arrangementsetc.


8/60

Planning and organizing : Detailed planningregarding the technical aspects, engineering

design, infrastructure, schedules, budgets etc isworked.

Implementation : The detailed engineering,issuance of orders, civil construction, etc are

undertaken.

Clean up : Finishing and handing over the plantto operating personnel.


9/60

Procedural Implementation

Formation of a company is governed by theprovisions of the companies act 1956 andconsists of promotion ( primary step ),

registration of the memorandum of the companywith the Registrar and flotation of the company (Raising Capital ).

The IRDA of 1951 divided all industries in three

categories. Government Private Joint


10/60


Licensing procedures : A license is a writtenpermission by the government to an industrial

undertaking to manufacturers specified in theschedule.

Post 1991, after the govt. adopted the policy ofLPG, licensing procedures for all sectors of non

strategic importance were abolished. The onlystrategically important sectors were the defense,environment etc.


11/60


SEBI requirements : The SEBI Act of 1992, hadthree main objectives :

The protect the interest of investors in security To promote the development of security

markets.

To regulate the security market. All strategies should be developed by taking into

consideration all the regulations laid by theSEBI.


12/60


The MRTP Act of 1969 had the main aim ofpreventing the concentration of economic

power.. It oversees and prevents : Collusions and Cartels

Price discrimination among different customers

Forcing buyers to buy a whole range ofproducts.

There should always be free and faircompetition.


13/60


Foreign collaboration procedures : many strategies resultin foreign collaborations. Foreign investment is of twotypes :

FDI takes place through wholly owned subsidiariesforeign institutional Joint Ventures and Acquisitions.

FII takes place when the outside parties invest ininstruments such as GDR ( Global Depositary Receipts )FCCBs (Foreign currency convertible bonds ).

Special incentives are given to NRIs for this purpose.


14/60


FERA / FEMA has now considerablyliberalized rules related to maintenance of

dollar accounts by exporters, remittanceof foreign exchange for visits abroad,agency commission export claims etc.


15/60


Export Import requirements : Thegovernment today supports import

substitutions and offers incentives toorganizations who take initiatives inproduction of capital goods and raw

material which is currently imported.


16/60


Patenting and Trademark requirements :Owning to the international change, patents,trademarks, copyrights, designs are assuminggreater importance.

Important industries where innovations aretaking place are chemical, computer software,entertainment, food, pharma etc wherepatents are a major tool. These elements aregoverned by the Trademark and MerchandiseMark Act, 1958, Copyright Act 1957.


17/60


Labour Legislation requirements : Various lawsrelated to the betterment of the workforce have

been formulated. These include : Labour Laws related to women and children.

Labour Laws related to specific industries likemines, minerals etc.

Rules regarding the provision of a base forwages, social security, bonus have beenformulated.


18/60


Environment Protection and Pollution Control : Sterncontrol has to be enforced on use of non renewablesources of energy such as oil and natural gas. Increased

national and global awareness about overuse and misuseof natural resources such as air, land, water, hasresulted into a number of environment protection actssuch as the Environment Protection Act, 1986, TheWater ( Prevention and Control of Pollution ) Act 1974,

The Air (), 1981, The wildlife Protection Act, 1972 etc. Besides this the Central and state governments have set

up separate pollution control boards.


19/60


Consumer Protection Requirements : To protectthe consumers from any unethical practices and

unfair acts, all organizations have to abide to theprovisions of the Consumer Protection Act.

The issues of consumer protection is highlightedin the procedural implementation and at the

time of formulation business and operationallevel strategies.


20/60

Structural Implementation

Org. growth : With a change in the objectives inan upward direction, suitable changes are to be

made in the formal and informal organization. Org. structure : In alignment with the changed

strategies, suitable changes have to be made inthe org. structure. Shifting from simple

structures to more complex structures like theMatrix or Hybrid structures may be essential.


21/60

Structural Implementation

Phases of Organizational Growth : Initial expansion & accumulation of

resources Rationalization of the use of resources. Expansion into new products & business

lines Development of new organization structure

to enable effective mobilization & utilizationof resources.


22/60

Options

The above 4 stages give rise to 3 types oforganization structures :

Type 01 : One organization, single product

market, hence central decision making. Type 02 : Expansion and hence top boss

delegated some decision making & authority tomanagers.

Type 03 : Diversification leads to multi productmulti structure and hence need for complete de centralization arises.


23/60

Types of Org. Structures

Simple org. structure : Two levels, owner manager &employee. Useful for small firms. Implementation mosteasy. Success depends upon the skill levels of the

owner. Functional org. structure : As an org. grows & develops

a number of related products and markets, structurechanges to reflect specialization in functional areas i.eproduction, marketing, R&D, etc.

Divisional Org. structure : As firms develop new productsin different industries and markets, they may evolvedivisional org. structure. Each division may operateautonomously under a divisional head.


24/60

Types of Org. Structures

SBU Structure : When divisional structuresbecome unmanageable by one CEO, orgs. mayreorganize themselves by appointing VPs foreach related business.

Matrix org. structure : Used to facilitate &development & execution of variousprogrammes or projects. Each of the VPs havefunctional responsibility for all the projects, whileeach project manager has project responsibilitycompleting and implementing strategy.


25/60

Patterns of Growth of Large Corporations:

Simple structure is the oldest and most commonorganizational form

Staff serve as an extension of the top executivespersonality

Highly informal

Coordination of tasks by direct supervision

Decision making is highly centralized Little specialization of tasks, few rules and

regulations, informal evaluation and reward system

Simple Structure

P tt f G th f L C ti


26/60

Patterns of Growth of Large Corporations:

Functional Structure

Lower-level managers, specialists, and operating personnel

Di i i l St t


27/60

Divisional Structure

Lower-level managers, specialists,

and operating personnel


28/60


Organized around products, projects, or markets

Each division includes its own functional

specialists typically organized into departments Divisions are relative autonomous and consist of

products and services that are different fromthose of other divisions

Division executives help determine product-market and financial objectives


29/60


Strategic business unit (SBU) structure

Divisions with similar products, markets,

and/or technologies are grouped intohomogenous SBUs

Task of planning and control atcorporate office is more manageable

May become difficult to achievesynergies across SBUs


30/60

Matrix Structure


31/60

Keys for org. structure

Functional Structure It is used for a singleproduction or a related product, single locationorganization, medium in size. Eg. John deer,Tractor manufacturing.

Divisional Structure It is used for multi product,multi location organization, vast in the turnover,complex to control, may be multinationals. Eg.Tata Motors in Pune

Matrix Structure It is used where you want tomake the organization innovative or sometimeyou want cost optimization.

Strategic Business Unit SBU are used to makeorganization profit and result oriented.


32/60

Behavioral Implementation

Leadership: Three Interdependent Activities

Leadership is the process of transforming

organizations from what they are to what theleader would have them become

Leadership should be

Proactive

Goal-oriented

Focused on the creation and implementation of acreative vision


33/60

DeterminingStrategic

Direction

Exploiting &Maintaining

CoreCompetencies

DevelopingHumanCapital

Sustainingan Effective

OrganizationalCulture

EmphasizingEthical

Practices

EstablishingBalanced

OrganizationalControls

Exercise of Effective Leadership

Effective Strategic Leadership

D t i i



34/60

Strategic direction means the development of a long-term vision of a firms strategic intent.

A charismatic leader can help achieve strategic intent.

It is important not to lose sight of the strengths of theorganization when making changes required by a newstrategic direction.

Executives must structure the firm effectively to help

achieve the vision.

Determining

Strategic

Direction

Determining

Strategic

Direction


CoreCompetencies




EmphasizingEthical

Practices




E l i i &



35/60

Exploiting &

Maintaining

Core Competencies

Determining

Strategic

Direction


CoreCompetencies




EmphasizingEthical

Practices



g p

Core competencies are resources and capabilities that serve asa source of competitive advantage for a firm over its rivals.

Strategic leaders must verify that the firms competencies areemphasized in strategy implementation efforts.

In many large firms, and certainly in related diversified ones,core competencies are exploited effectively when they aredeveloped and applied across different organizational units.

Core competencies cannot be developed or exploitedeffectively without developing the capabilities of human capital.

D l i



36/60

Developing

Human

Capital

Determining

Strategic

Direction


CoreCompetencies




EmphasizingEthical

Practices



g p

Human capitalrefers to the knowledge and skills of the firmsentire workforce.

Employees are viewed as a capital resource that requiresinvestment.

No strategy can be effective unless the firm is able to develop andretain good people to carry it out.

The effective development and management of the firmshuman capital may be the primary determinant of a firmsability to formulate and implement strategies successfully.

Sustaining an



37/60

Sustaining an

Effective


Determining

Strategic

Direction


CoreCompetencies




EmphasizingEthical

Practices



g p

An organizational culture consists of a complex set of

ideologies, symbols, and core values that are sharedthroughout the firm and influences the way it conductsbusiness.

Shaping the firms culture is a central task of effectivestrategic leadership.

An appropriate organizational culture encourages thedevelopment of an entrepreneurial orientation amongemployees and an ability to change the culture asnecessary.

Reengineering can facilitate this process.


38/60

Every job in the company is essential and important

The benefits ofbusiness reengineeringaremaximized when employees believe that:

All employees must create value through their work

Constant learning is a vital part of every persons job

Teamwork is essential to implementation success

Problems are solved only when teams accept theresponsibility for the solution

Changing Culture and Reengineering

Emphasizing



39/60

Emphasizing

Ethical

Practices

Determining

Strategic

Direction


CoreCompetencies




EmphasizingEthical

Practices



Ethical practices increase the effectiveness of strategyimplementation processes.

Ethical companies encourage and enable people at allorganizational levels to exercise ethical judgment.

To properly influence employee judgment and behavior,ethical practices must shape the firms decision-makingprocess and be an integral part of an organizations culture.

Leaders set the tone for creating an environment of mutual respect,honesty and ethical practices among employees.

Establishing



40/60



Determining

Strategic

Direction


CoreCompetencies




EmphasizingEthical

Practices



Organizational controls provide the parameters within which

strategies are to be implemented and corrective actionstaken.

Financial controls are often emphasized in largecorporations and focus on short-term financial outcomes.

Strategic control focuses on the contentof strategic actions,rather than theiroutcomes.

Successful strategic leaders balance strategic control andfinancial control (they do not eliminate financial control) withthe intent of achieving more positive long-term returns.

d f


41/60

A Leaders Bases of Power


42/60

Functional Implementation

Five functional areas that need specialaddress in implementation are :

Marketing

Research and development

Production-operations-manufacturing

Human resource managementFinancial-accounting


43/60

Marketing

Marketing is defined as a process ofassessing and meeting individuals or

groups wants and needs by creating,offering, and exchanging products ofvalue.


44/60

Possible Marketing Strategies

Segmentation StrategiesGeographic

DemographicPsychographicBehavioral

Target Market Selection Strategies

Single-segment concentration

Selective specializationProduct specializationMarket specializationFull market coverage


45/60

Differentiation Strategies

Product itself

ServicesPersonnel Image

Positioning Strategies

Attribute positioning

Benefit positioning

Use-application positioningUser positioning

Competitor positioningProduct category positioningQuality-price positioning


46/60

Marketing Mix Strategies

New-product developmentProduct lineBrandPackaging-labelingProduct life cycle decisions


47/60

Product Life Cycle

Introduction Growth Maturity Decline

Sales

Time


48/60

PLC

The product life cycle (PLC) concept is arecognition that a products sales rise and

decline, bringing about the need for differentstrategies for coping with these ups and downs.

The various stages of the PLC might require

changes not only in the product strategies, butin the other Ps, as well.


49/60

Marketing Mix Strategies

Pricing The pricing strategy depends upon the

organizations pricing objectives survival, maximum currentprofit, maximum current revenue, maximum sales growth,

maximum market skimming, product-quality leadership, orother.

Markup pricing Target-return pricing Perceived-value pricing Value pricing Going-rate pricing Sealed-bid pricing Geographical pricing Promotional pricing

Price discounts-allowances Discriminatory pricing

Product mix pricing


50/60

Promoting

Advertising Billboards Point-of purchase displays Symbols and logos Packaging inserts Sales promotion

Public relations Personal selling Direct marketing


51/60

Possible HRM Strategies

Organize for efficiency or innovation

Organize for control or flexibility

Use specialized or broad job categories Use detailed or loose work planning

Use internal or external recruitment

Who makes hiring decision Whats important in hiring

Formal or informal approach

Possible Human Resource Management


52/60

gStrategies

Employee Separations

How to downsize Hiring freeze Support for terminated employees Preferential or non-preferential rehiring process

Performance Appraisal Customized or uniform appraisals

Appraisal for developmental or control purposes Multipurpose or focused appraisals Use multiple or one input


53/60

Possible Human Resource ManagementStrategies

Training and Development Buy or develop skills Individual or team-based training On-the-job or external training

Job-specific or generic training

Compensation

Fixed-pay or variable pay system Job-based or individual pay Seniority-based or performance-based system Centralize or decentralize pay decisions


54/60

Possible Research andDevelopment Strategies

R&D Emphasis

Basic scientific research

Product development Process development

R&D Timing

First mover

Follower


55/60

First Mover Advantages-Disadvantages

An organization thats first to bring a newproduct innovation to the marketplace or

to use a new process innovation is called afirst mover. Being a first mover has certainstrategic advantages and disadvantages.


56/60

Advantages

Reputation for being innovative andindustry leader

Cost and learning benefits resulting frommoving along experience curve first

Control over scarce assets preventingcompetitors from having access to them

Opportunity to begin building customerrelationships and customer loyalty


57/60

Disadvantages

Uncertain over exact direction technologyand market will go

Risk of competitors imitating innovations(free-rider effect)

Financial and strategic risks

High development costs

Possible Research and


58/60

Possible Research andDevelopment Strategies

Product and ProcessDevelopmentWho conducts R & D

Separate R&D department

Cross-functional team

Some variation

How is R& D conducted

Use prototypes

Use product tests

Use design reviews

Use test markets

How to implement new design

How to evaluate success of new design


59/60

Possible Financing-AccountingStrategies

Evaluating Financial Performance

How often

How much analysisFinancial Forecasting, Planning, and Budgeting

Percent of sales forecast

Discretionary financial needed model

Sustainable rate of growth model; Types of budgets used

Financing Mix

Financial structure-capital structure

Short-term versus long-term fund sources

Permanent or long-term sources


60/60

Possible Financial-Accounting Strategies

Other Financial Management Decisions

Capital budgeting choicesStock dividend policyCapital budgetingCash flow managementWorking capital management and short-term financingCash and marketable securities managementAccounts receivable and inventory managementUse term loans or leases

Current Financial-Accounting Strategies

Controlling costs

Compliance; New financial performance measures

Valuing intangible assets

implementation bpsm

Documents